New Home Mortgage Applications Decrease 12 Percent in June


Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for June 2022 show mortgage applications for new home purchases decreased 12% compared from a year ago. Compared to May 2022, applications decreased by 10%. This change does not include any adjustment for typical seasonal patterns.

MBA’s monthly estimate of new single-family home sales, which has consistently been a leading indicator of the U.S. Census Bureau’s New Residential Sales report, is that new single-family home sales were running at a seasonally adjusted annual rate of 620,000 units in June 2022, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.

“Higher mortgage rates and heightened economic uncertainty cooled borrower demand in June, leading to new-home purchase applications declining to the lowest level since April 2020,” says Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Additionally, new residential construction and permitting activity weakened from March through May, reducing the number of homes available for home buyers. MBA’s estimate of new home sales for June fell to a pace of 620,000 homes, a 15 percent drop of over 100,000 units compared to May.”

The seasonally adjusted estimate for June is a decrease of 14.7% from the May pace of 727,000 units. On an unadjusted basis, MBA estimates that there were 57,000 new home sales in June 2022, a decrease of 6.6% from 61,000 new home sales in May.

By product type, conventional loans composed 73.7% of loan applications, FHA loans composed 15%, RHS/USDA loans composed 0.5% and VA loans composed 10.7%. The average loan size of new homes decreased from $430,855 in May to $426,966 in June.

Image: Tessa Wilson on Unsplash

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